Double whammy for dairy farmers

Apart from the majority of dairy farmers in the unorganised sector, some in the organised sector who are also without bank accounts have been affected by the demonetisation moveAshish Kulshrestha | ET Bureau | November 30, 2016, 09:24 IST

Adding to the woes of farmers, the dairy sector has started seeing milk prices falling due to higher production of milk this winter with cheaper availability of animal feed.Dairy farmers in India are staring at a double-whammy. Farmers, who are saddled with a payment crisis because of the demonetisation move, are also seeing the price of milk falling as is customary every winter.

Apart from the majority of dairy farmers in the unorganised sector, some in the organised sector who are also without bank accounts have been affected by the demonetisation move. India, the world's largest milk producer with 20% share, currently has over 75 million dairy farmers, of which only a little over 40% are in the organised sector. A majority of dairy farmers sell their produce directly to consumers. Representatives of dairy farmers' associations have been highlighting the problems being faced due to delayed payments.

Nageswara Rao, joint secretary of Progressive Dairy Farmers' Association, said, “We are facing liquidity issues to clear our dues. Dairy farmers, who sell to housing societies, are the worst hit as they are not getting payments from households due to lack of currency notes which is delaying payments to feed producers and others.“

Cooperatives and private dairies that procure milk from farmers and make payments through bank accounts are taking temporary measures like cash advances and arranging animal feed on credit.

Adding to the woes of farmers, the dairy sector has started seeing milk prices falling due to higher production of milk this winter with cheaper availability of animal feed, both natural and manufactured. Experts say milk production in winters goes up by 10-15%.

Rao of dairy farmers' body said milk procurement prices in Hyderabad fell to Rs 28 a litre from Rs 32 a litre last winter thanks to increased supplies from Karnataka, Tamil Nadu and Maharashtra. Amul has expanded its marketing network buoyed by strong milk procurement capabilities from cooperatives in Gujarat, he said.